CHBO FINALS EXAM Questions and Answers

For Indiana corporations, the occurrence of a Disposition—meaning an Asset Sale or Stock Sale—is governed by the statute IC § 23-1-41-2. By default, the Board of Directors may approve, without shareholder input, any Disposition that is within the Ordinary Course of Business, meaning it le...

Barth v. Barth Ans- Derivative & Direct Action against Corps. Hobby Lobby Ans- CBHO are extensions of individuals Head v. Henry Tyler Construction Corp. Ans- Partners are Jointly and severally liable Longhi v. Mazzoni Ans- Piercing the corporate veil Cantor v. Sunshine Greenery, Inc Ans- De...

Closely Held Organization are businesses that are privately held by a "small group" of individuals. Ans- A. What is a closely held business organization? a. Contract obligations: Partners are jointly liable for all partnership debts and obligations. b. Tort obligations: Partners will be joi...

What are closely held businesses? Ans- A small, privately held corporation with only a few shareholders, usually family members or other close associates. Shares are not generally traded in the securities market. Sole Proprietor Partnership Corporations Limited Partnership Limited Liabilit...

Barth v. Barth (When can a TC treat an action raising Deriv claims as a Direct action from a shareholder?) Ans- a trial court in its discretion may treat an action raising derivative claims as a direct action from an individual shareholder, if it finds that to do so will not: (1) unfairly ex...

Rationale of Derivative actions Ans- 1) avoid multiplicity of actions 2) protect interests of creditors 3) assure fair distribution among all interested persons 8 factors to pierce the corporate veil (Aronson v. Price) Ans- 1) undercapitalization 2) absence of corporate records 3) fraudul...

Vicarious liability Ans- Legal doctrine under which a party can be held liable for the wrongful actions of another party. Vicarious liability test Ans- did the control of the day-to-day operations of the business reside with the agent or principal Independant contractor Ans- an agent who ha...

Barth v. Barth Ans- Majority rule, however, majority owners have fiduciary duty to minority owners and business itself. In general, proper procedure for minority to challenge majority is a derivative action on behalf of the business. Bedrock Principle of Limited Liability Ans- Unless otherw...